Financial institution network and the certification value of bank loans

Christophe Godlewski and Bulat Sanditov
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Bulat Sanditov: Telecom Ecole de Management

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: Social networks and reputation are believed to play important roles in mitigating informational frictions related to financial intermediation, in particular bank lending. We investigate the effect of the network and reputation of financial institutions on the certification value of bank loans using data on syndicated loans to European companies. We find that the presence of more central and reputable leaders in a syndicate substantially increases the stock market’s reaction to loan announcements. This certification value is reinforced when informational frictions are more important, but vanishes in case of severe disruptions in the functioning of financial markets, such as during the financial crisis of 2008.

Keywords: bank loan; syndicated lending; reputation; social network analysis; betweenness centrality; event study; Europe. (search for similar items in EconPapers)
JEL-codes: G21 G24 L14 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ban and nep-net
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Citations: View citations in EconPapers (1)

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http://ifs.u-strasbg.fr/large/publications/2015/2015-02.pdf (application/pdf)

Related works:
Journal Article: Financial Institutions Network and the Certification Value of Bank Loans (2018)
Working Paper: Financial institutions network and the certification value of bank loans (2018)
Working Paper: Financial institution network and the certification value of bank loans (2015)
Working Paper: Financial institution network and the certification value of bank loans (2015)
Working Paper: Financial institution network and the certification value of bank loans (2015)
Working Paper: Financial institution network and the certification value of bank loans (2015)
Working Paper: Financial institution network and the certification value of bank loans (2015)
Working Paper: Financial institution network and the certification value of bank loans (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2015-02

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